Grayson Sends Letter To Geithner, Bernanke Demanding Foreclosure Freeze, Warns Of Systemic Bank Failure Risk

Oct 8, 2010

EDITOR’S NOTE: Probably the most important thing that the release of this letter accomplishes is that all federal and state agencies are now put on notice that there is an allegation of foreclosure fraud, a tacit admission to which is evident in the voluntary suspension of foreclosures by some companies and the involuntary suspension of foreclosures, like in Connecticut. What is needed now a special touch in leadership that navigates the very challenging issues that lie just beneath the surface of these rippling waters. Those that can act right now and who can assert authority of a kind that transcends technical construction can, if they choose to do so, prevent the logical consequences of the systemic risk posed by prior conduct and channel the energy of that authority and the capacity of players at the table to diversify the risk, maintain the arguable value of certain securities, and release the market from its current state. An equilibrium is possible but only if that action is taken now before other plans are refined and executed.

Posted on October 7, 2010 by Foreclosureblues

Today, October 07, 2010, 1 hour ago | Tyler Durden

Alan Grayson is back on the scene, having sent a letter to Financial Stability Oversight Council which includes pretty much all of Wall Street’s pawns, including Bernanke, Geithner, Bair, Gensler, Walsh, and DeMarco, in which he asks the FSOC to “suspend foreclosures until this problem is understood and its ramifications dealt with.” And the ramifications, per Grayson, Zero Hedge and everyone else, will be dire for the banking sector: “So far, banks are claiming that the many forged documents uncovered by courts and attorneys represent a simple ‘technical problem’ with foreclosure processes. This is not true. What is happening is fraud to cover up fraud… The banks didn’t keep good records, and there is good reason to believe in many if not virtually all cases during this period, failed to transfer the notes, which is the borrower IOUs in accordance with the requirements of their own pooling and servicing agreements. As a result, the notes may be put out of eligibility for the trust under New York law, which governs these securitizations. Potential cures for the note may, according to certain legal experts, be contrary to IRS rules governing REMICs. As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents. There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as the mortgage titles were never officially transferred to the trusts… The liability here for the major banks is potentially enormous, and can lead to a systemic risk.”

So now that Obama has declined to halt the foreclosure halt process, TARP 2 anyone?

Posted in bubble, Corruption, Eviction, securities fraud |